What Is a Value Proposition?

Written by Coursera Staff • Updated on

A value proposition is how a business uniquely serves its customers and how it differentiates itself from other competitors in the market. Learn more about how value propositions help companies and key elements of effective value propositions.

[Featured image] A UX designer is reading a value proposition on their phone.

A value proposition serves as both a mission statement and a marketing tool, it describes what the company, product, or service does. Before starting your business it’s important to create an effective value proposition to differentiate yourself from others. It also illustrates what makes the company’s offering superior to its competitors. 

Read more: User Experience (UX) Terms: A to Z Glossary

What is a value proposition used for?

Having a unique value proposition creates company value for its customers. For example, until wireless headphones came along, customers didn’t realize they wanted headphones. It helps a company of any size attract investors, new customers, or clients. It can also help keep customers and boost brand loyalty. 

What key elements do effective value propositions have in common?

Compelling value propositions often share key elements. A company starts by identifying and addressing its target audience. Then, it communicates how the brand, product, or service differs from competitors and how it relates to the target audience. 

1. Identification of target audience

To make sure its message is getting to the right customer, a company needs to identify its target audience. To pinpoint the target audience, it helps to analyze the following demographics:

  • Age

  • Gender

  • Race

  • Geographical location

  • Education level

  • Income

  • Marital status

  • Family size 

2. Differentiation

Communicating how a brand, product, or service differs from competitors helps customers and investors understand value. Ways that companies can differentiate themselves include:

  • Offering unique products or services 

  • Providing a superior customer experience

  • Saving customers time

  • Using quality materials in product construction

  • Providing product guarantees or exceptional warranties

  • Presenting an appealing visual identity (website, logo, etc.)

3. Relevance to customers 

Customers want to know how a brand, product, or service relates specifically to them. Companies can reassure customers by creating a website that excites—or inspires loyalty from—a particular audience. It’s also important to share how a product or service addresses a customer’s problems or pain points

Read more: Marketing Strategy: What It Is and How to Create One

How UX design helps in creating value propositions

When design focuses on user experience (UX), it helps meet the needs and address customers’ pain points. Key processes involved in UX design include:

  • Design thinking: A process that involves identifying a customer problem, having empathy for the customer, coming up with a solution, developing and testing prototypes, and creating a final product

  • Data analysis: A process in which companies analyze customer behaviors and other data to make better decisions

  • Design iteration: The testing and improvement process that leads to a final product or service 

Getting started with Coursera

To learn more about UX design, consider enrolling in the Google UX Design Professional Certification on Coursera. You can gain greater knowledge of UX design concepts, explore the UX design process, and delve into UX research methods. This program is designed for beginners with no prior experience to gain job-ready skills for their first UX design role. Upon completion, gain a Professional Certificate that you can include in your resume or LinkedIn profile. 

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